Decisions, Decisions

By Andy Grove

Making decisions – or more properly, participating in the process by which they are made – is an important and essential part of every manager’s work from one day to the next.

Decisions range from the profound to the trivial, from the complex to the very simple:
Should we buy a building or should we lease it?
Should we hire this person or that one?
Should we give someone a 7 percent or a 12 percent raise?
Can we deposit a phosphosilicate glass with 9 percent phosphorus content without jeopardizing its stability in a plastic package?
etc.

When someone graduates from college with a technical education, at that time and for the next several years, that young person will grow in knowledge and experience and up-to-date in the technology of time. Hence, he possesses a good deal of knowledge-based power in the organization that hired him. If he does well, he will be promoted to higher and higher positions, and as the years pass, his position power will grow but his intimate familiarity with current technology will fade.

Put another way, even if today’s veteran manager was once an outstanding engineer, he is not now the technical expert he was before he got promoted. At Intel, anyway, we managers get a little more obsolete every day.

If Intel used people holding old-fashioned position power to make all its decisions, decisions would be made by people unfamiliar with the technology of the day.

And in general, the faster the change in the know-how on which the business depends or the faster the change in customer preferences, the greater the divergence between knowledge and position power is likely to be.

If your business is depends on what it knows to survive and prosper, what decision-making mechanism should you use?
The key to success is again the middle manager, who not only is a link in the chain of command but also can see to it that the holders of the two types of power mesh smoothly.

An ideal model of decision making in know-how-business:

Free discussion => clear decision => full support

The first stage should be free discussion, in which all points of view and all aspect of an issue are openly welcomed and debated. The greater the disagreement and controversy, the more important becomes the word free. This sounds obvious, but it’s not often the practice.

I was told in a certain company, “In general, people who do well in this company wait until they hear their superiors express their view and then contribute something in support of that view.” This is a terrible way to manage. All it produces is bad decisions, because if knowledgeable people withhold opinions, whatever is decided will be based on information and insight less complete because people didn’t really speak their minds freely.

The next stage is reaching a clear decision. Again, the greater the disagreement about the issue, the more important becomes the word clear. In fact, particular pains should be taken to frame the terms of the decision with utter clarity.

Finally, everyone involved must give the decision reached by the group full support. This does not necessary mean agreement: so long as the participants commit to back the decision, that is a satisfactory outcome. Even when we all have the same facts and we all have interests of an organization in mind, we tend to have honest, strongly felt, real differences of opinion. But an organization does not live by its members agreeing with one another about everything. It lives instead by people committing to support the decisions and the moves of the business. All a manager can expect is that the commitment to support is honestly present, and this is something he can and must get from everyone.

Another desirable and important feature of the model is that any decision be worked out and reached at the lowest competent level. The reason is that this is where it will be made by people who are closest to the situation and know the most about it.

And by “know” I don’t just mean “understand technically.” That kind of expertise must be tempered with judgment, which is developed through experience and learning from the many errors one has made is one’s career.

Thus, ideally, decision-making should occur in the middle ground, between reliance on technical knowledge on the one hand, and on the bruises one has received from having tried to implement and apply such knowledge on the other. To make a decision, if you can’t find people with both qualities, you should aim to get the best possible mix of participants available.

For example, we at Intel are likely to ask a person in management senior to the other members of the group to come to the meeting. But it is very important that everybody there voice opinions and beliefs as equals throughout the free discussion stage, forgetting or ignoring the status differentials.

In our business we have to mix knowledge-power people with position power people daily, and together they make decisions that could affect us for years to come. If we don’t link our engineers with our managers in such a way as to get good-decisions, we can’t succeed in our industry.

Peers tend to look for the a more senior manager, even if he is not the most competent or knowledgeable person involved, to take over and shape a meeting. Why? Because most people are afraid to stick their necks out.

The peers –group syndrome:
One of the reasons why people are reluctant to come out with an opinion in the presence of their peers is the fear of going against the group by stating an opinion that is different from that of the group. Members of the group were waiting for a consensus to develop and didn’t speak their minds freely. That certainly makes it harder for a manager to make the right decisions.

You can overcome the peer-group syndrome if each of the members has self-confidence, which stems in part from being familiar with the issue under consideration and from experience. Nobody has ever died from making a wrong business decision, or taking inappropriate action, or being overruled. And everyone in your operation should be made to understand this.

If the peer-group syndrome manifest itself, and the meeting has no formal chairman, the person who has the most at stake should take charge. If that doesn’t work, one can always ask the senior person present to assume control and give the group the confidence needed to make a decision.

Sounding dumb
One thing that paralyzes both knowledge and position power possessors is the fear of simply sounding dumb. For senior person, this is likely to keep him from asking the questions he should ask.

The same fear will make other participants merely think their thoughts privately rather than articulate them for all to hear; at best they will whisper what they want to say to a neighbor.

As a manager you should remind yourself that each time an insight or fact is withheld and an appropriate question is suppressed, the decision-making process is less good than it might have been.

Lower-level people have also to overcome the fear of being overruled, which might mean embarrassment.

We need to overcome our fear of sounding dumb or of feeling being overruled, and lead us to initiate discussion and come out front with a stand.


Striving for the output
It is legitimate – in fact, sometimes unavoidable – for the senior person to wield position power authority if the clear stage is reached and no consensus has developed. We should not prolong the decision making if the clear stage is reached.

But it is not legitimate – in fact, it is destructive – for him to wield that authority any earlier.

If you enter the decision-making stage too early or wait too long, you won’t derive the full benefit of open discussion. The criterion to follow is this: Don’t push for a decision prematurely. Make sure you have heard and considered the real issues rather than the superficial comments that often dominate the early part of a meeting.

But if you feel that you have already heard everything, that all sides of the issue have been raised, it is time to push for a consensus – to step in and make a decision.

Sometimes, people can drift away from the near consensus when they are close being right, and then free discussion goes on in an unending search for consensus, diminishes the chances of reaching the correct decision. So moving on to make the decision at the right time is crucial.

One of the manager’s key tasks is to settle six important questions in advance:

What decision needs to be made?
When does it have to be made?
Who will decide?
Who will need to be consulted prior to making the decision?
Who ratify or veto the decision?
Who will need to be informed of the decision?

People invest a great deal of energy and emotion in coming up with a decision. Politics and manipulation or even their appearance should be avoided at all costs.

Group decisions do not always come easily. There is a strong temptation for the leading officers to make decisions themselves without the sometimes onerous process of discussion because the process is indeed onerous, people sometimes try to run away from it. If you could make decisions without consulting anybody, so could everybody else.